Earlier this week, we reported on a controversy surrounding Apple’s Grand Central Store, set to open Saturday. Critics are blaming New York City’s mass transit agency for inking a ‘sweetheart’ deal giving the tech giant a huge break on the lease cost. The MTA is now fighting back, telling those wanting an investigation into the Apple store to “bring it on.”In a letter, MTA spokesman Aaron Donovan criticizes an early New York Post report on the Grand Central lease as “inaccurate.” The complete letter follows:

Reports in the New York Post have been inaccurate, and we want to set the record straight with the information below. With regard to any calls for an investigation into the lease, our comment is this: “Bring it on. This is the best possible deal for the MTA, quadrupling the rent we receive and bringing foot traffic to Grand Central Terminal that will increase revenue from all of our retailers. We look forward to explaining the details of this competitively bid transaction to anyone who is interested.”

The real estate community understands that lease agreement with Apple is a great achievement for the MTA. Neighboring tenants at Grand Central are very pleased Apple will be joining them and bringing more foot traffic.

The Facts: MTA’s Lease with Apple at Grand Central Terminal

The space that will soon house a new Apple retail store is a great location but has major limitations for retail, including very strict historic preservation regulations.

Until the MTA took action earlier this year, the restaurant Metrazur had a lease through 2019 in this space that paid only $263,000 annually to the MTA. This lease dates back to the restoration of Grand Central Terminal in 1999 and never generated enough revenue to contribute any percentage rent.

Believing that more revenue could be generated, the MTA put the space out for bid knowing that it would take a unique respondent to pay significant upfront costs: $5 million to buy out the existing lease and more than $2.5 million for infrastructure improvements.

The deal with Apple is a win-win for the MTA and our customers:

Quadruples the rent coming to the MTA (from $263,000 to $1.1 million)

Provides a terrific new amenity at Grand Central Terminal.

Will drive traffic to all of the retailers at Grand Central, where every 1% in additional sales is worth $500,000 to the MTA.

Includes permanent infrastructure improvements to Grand Central, including HVAC systems and new egress.

This is the best possible deal for the MTA. When all of the costs are included, Apple is paying more than $180 per square foot over the ten-year lease. As the competitive bidding process revealed, there are no other uses for this space that would generate the same revenue for the MTA given the up-front costs and limitations.

How is it anybody else’s business but the MTA’s what they get for their leases?

Abram Lloyd Siegel

The taxpayers I guess

coffee wired

are you joking? the MTA technically is a “public benefit corporation,” which means a public corporation chartered by a government (in this case, New York State) for the public benefit. so if youre paying taxes, its your business.

Andy Murdock

Saying the “Reports in the New York Post have been inaccurate” is like saying my dog pooped in the park.

Mikael Fransson

Isn’t it owned and funded by the state (= taxes)…if that’s the case it’s the taxpayers business.

Mikael Fransson

Maybe this applies to Sean….

Isaac Asimov:

There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that “my ignorance is just as good as your knowledge”.

Sean Smith

So instead of offering up constructive insight as others have done, you instead simply offer an insult. Pretty obvious the type of character you have (i.e., none).

Sean Smith

Thanks to everybody who constructively pointed out that this is publicly funded and is not a private organization. I don’t live in NY or take the subway so I was unfamiliar with this. Mikael (sp.?), you could learn a thing or two about how to politely respond to somebody.

CharliK

“are you joking?”

How rude. Did it ever occur to you that not everyone here is from New York or another major city to know that such agencies are tax funded.

Sean Smith

If you think that’s rude, take a look at Mikael’s response above where he essentially classifies me as part of a “cult of ignorance” simply because I didn’t know MTA was government funded. Wow, I didn’t know something, so therefore I am ignorant and “anti-intellectual” about everything!

The funny thing is, based on his comments in his own Twitter feed, I think he’s the type of person that would most likely be railing about how the MTA is part of “Wall Street greed” if they were a private company and charging Apple a lot more money.

skippykawakami

“Bring it on”, huh? Well, the good news is, those words have never, ever come back to haunt anyone later.

Mikael Fransson

See my first reply…

Mikael Fransson

Heard about Google?

Mikael Fransson

So the Asimov was right about you then;-)

Mikael Fransson

For the record, I don’t live in NY either. I just Googled it and also, most public transportation is just that, public.

lrd

With Apple as a tenant, the MTA gets a guaranteed rent. More foot traffic and lots of high salary earning geeks. Like who else can bring home the bacon like that?

Any other company could be gone in a year or two.

Len Williams

Thanks Ed for putting this information out there. I’m amazed how ready so many people are to criticize or imagine that nefarious plots are behind the scenes. According to the MTA, they’re making out like bandits and quadrupling their income just from the Apple Store, gaining improvements to the building and drawing in more customers for the other stores in the building. That’s a win/win/win situation.

Quite aside from that, it’s nobody’s business what the MTA and Apple agree on. If they’re both happy, end of story.

Tom Cruize

hey there, we are selling unlock-iphonesoftware (.com) contact me please (sorry, you need Javascript to see this e-mail address)

About the author

Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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